“Wellness will see sustained strength”, Jope predicted
The notion of “value” will rise up the consumer’s agenda as the macroeconomic impact of the Covid-19 pandemic hits spending, Unilever CEO Alan Jope has said today (23 April).
Speaking to analysts after Unilever reported its sales for the first quarter of 2020, Jope outlined how the FMCG giant was looking at the consumer and category landscape post-Covid-19.
“From a consumer perspective, I think there’s absolutely no doubt that there’s going to be lasting changes on the importance of value. I think we are going to go into tough economic times for an extended period,” Jope said.
The Scotsman, a Unilever veteran who took the helm at the Knorr and Magnum maker at the start of 2019, echoed comments made this week by Danone CEO Emmanuel Faber that larger brands could benefit as consumers adjust after the Covid-19 pandemic but he also highlighted how the concept of value would mean consumers more often look for lower-priced options.
“At these times, consumers do seek the reassurance of big, familiar, trusted brands and high-quality products. We always see this in a crisis but in this case, in the aftermath, we do anticipate some trading down to more value-priced brands because we are facing an inevitable economic downturn,” Jope explained, before insisting: “Unilever is generally well-positioned for these changes, given our strong brands, our strong category positions, our strong local businesses and a portfolio that does cover the full spectrum of price points.”
Jope, who succeeded Paul Polman at the Unilever helm 15 months ago, also put forward another macro consideration that would shape consumer habits.
“We’re pretty confident that anything that’s in the space of wellness – health and well-being – is going to enjoy sustained strength,” he said. “Those are some of the consumer bets. There are others that I don’t really want to mention because we think they’re a bit proprietary, those insights, from our extremely good proximity to consumers. They’re also in many cases sometimes local.”
One of the trends Unilever said it had seen across markets in the early weeks of the Covid-19 pandemic is the growth in online grocery and Jope predicted that was a development that could continue. He also called out another retail channel that will benefit.
“From a channel perspective, I’ve already mentioned this is one-way traffic towards online grocery and online shopping in general – and it will be an accelerator of the trend toward proximity shopping which we’d already been seeing and are seeing at scale right now,” he said.
In the first quarter of 2020, Unilever posted flat sales, resulting in a turnover of EUR12.44bn versus EUR12.42bn a year earlier, with volumes up 0.2% but pricing down 0.2%.
For Unilever’s Foods and Refreshment division, underlying sales declined 1.7%, with volumes down 1.8% and positive pricing of 0.1%.
The division’s out-of-home ice cream unit, as well as its foodservice-focused food solutions business, suffered amid the global government lockdowns.
Jope, asked if the pandemic had changed Unilever’s stance on the make-up of its food portfolio, stood by those businesses.
“In terms of categories and business models, it’s not changed our thinking so far,” he said. “Ice cream is a wonderful business and we think the impact on ice cream will be deep but short-lived. We think that foodservice is a very attractive channel where we have super-strong positions. It’ll be longer for people’s return to restaurants to happen but it will come, learning from history. We’re being quite agile on reorientating our innovation programmes around changing consumer patterns.
“We’re moving quite quickly on rethinking our channel programmes but we’re not changing our point of view on category and business model attractiveness.”